Thursday, June 20, 2013

Today the Supreme Court, in American Express Co. v. Italian Colors Restaurant (Italian Colors), gave companies a tool to use to keep you from enforcing the legal protections for your wages, against discrimination, and for average consumers and small businesses. Please, pay attention. It is not right, and it affects you, no matter who you are.

I am for big corporations. They give lots of people jobs. They give us stuff we want. They pay taxes that help build roads and schools and hospitals. They sometimes donate money to worthy causes. I get it. They don’t need a thank you note from me. I pay them every day, and so does everyone else. And, I don’t have a problem with good businesspeople getting rich. America is, in part, about capitalist incentives that we each have to work hard, get ahead, and provide for our families, friends, and causes we believe in.

But, that’s not all America is about. America is also about fairness, protecting the little guy’s/gal’s rights against the big guy/gal. Anyone being honest knows that big corporations will trample individual workers’, consumers’, and small businesses’ rights, if left unchecked. I do not need to view this as a conspiracy by Big Business in every instance. I can simply observe that companies do sometimes violate workers’ rights, based on years of seeing employment law violations and holding companies (and the government) accountable in my law practice. I know the same is true regarding consumers and small businesses, based on my own experiences as a consumer and small business owner. Teddy Roosevelt (a Republican) figured this out over 100 years ago when he helped put an end to (or at least put checks upon) the Gilded Age. FDR (a Democrat) figured this out when he helped end the Great Depression with the Fair Labor Standards Act, 75 years ago. I don’t know why we need to keep figuring this out. But, here we go again. Big companies need to be regulated.

When companies overstep – sometimes deliberately, based upon a cost-benefit analysis or harboring discriminatory or retaliatory animus – or even when they inadvertently fail to comply with legal protections for workers, consumers, and small businesses – we all need to have effective recourse to bring companies back into line. That recourse is litigation, or the threat of litigation, to enforce important statutory principles. Sometimes companies respond to employees, consumers, or small businesses providing helpful feedback, and come into compliance voluntarily. But, without the risk that litigation can pose to the companies’ bottom line, companies become immune to the important protections that exist for ordinary citizens.

What if a big corporation, like AT&T Mobility, is cheating their cell phone customers out of $30 or $40 on their bills, millions of times, for years? You have to take the kids to school and get to work. You have to get home and fix dinner after work. You have to clean the dishes. Then, you’re tired and want to sit in front of the TV. Maybe this is not your average day but, whatever your day looks like for you, I suspect it does not leave a lot of hours to fight over $30 or $40 dollars you were once cheated. If someone walked up to you and stole your wallet, with $30 or $40 in it, you might call the police, and they would take a report, and might even try to find the culprit, if they got there in time. But, if AT&T Mobility decides to steal this money, millions of times, there is nothing you can do about it, unless the company fixes the overcharge out of the goodness of their corporate heart. They will often not be motivated by the threat that customers or workers or small businesses will go elsewhere – because the other big companies are doing the same thing. They will respond to you if you are prepared to litigate.

You won’t litigate this $30-$40 case by yourself. In fact, even if your case is worth $30,000-$40,000, which is real money to most of us, you can’t do it by yourself. The company will hire lawyers to fight the case, and you need to fight them on a level playing field to have a shot at getting back what was taken from you. Trouble is, fully litigating a case – either in Court or arbitration – usually costs tens or hundreds of thousands of dollars in attorneys’ fees and costs, if not more, takes many months or years of your time and energy, and, there is always a risk you won’t win. Those of us who have arbitrated cases know that it is not true that arbitration is always cheaper, simpler, or quicker, than proceeding in court, as the Supreme Court seems to suggest. (Slip Op. at 9.) Unless you have been so wronged that it changed your life – you lost your job, you suffered egregious harassment or retaliation, you had so much stolen from you that you were on the verge of going broke, hundreds of thousands – you just won’t undertake this long and expensive litigation alone in arbitration, any more than you would in court. Big companies know this.

So, what will happen? If you have been violated –had your wages stolen, been subjected to discrimination, retaliated against for exposing wrongdoing – and you and/or your attorneys are not prepared to spend the resources and effort necessary to fight, then companies will most often simply deny wrongdoing, and spend whatever resources are necessary to bury your claims.

This is why class and collective action litigation is so important. It is a cornerstone of American democracy and capitalism in the modern era. It is what allows the little guy/gal to stand up to the big guy/gal and get ahead. You can’t afford to keep the company in check by yourself. But if there are dozens, or hundreds, or thousands, or millions of people who are standing with you, you have a fighting chance.

For several years, Justice Scalia and his allies on the United States Supreme Court have seemingly taken any opportunity to edify big corporations’ defenses against workers, consumers, and small businesses. Though always railing against “judicial activism,” Justice Scalia has become the chief judicial activist, reshaping the 1925 Federal Arbitration Act (FAA) to become a major weapon against class and collective action litigation – something the FAA’s architects never could have envisioned, since class and collective actions did not evolve to their modern form until well after the FAA came about. Though average Joe or Jane on the street has never heard of the FAA, it now affects every one of us.

Back to today’s decision in Italian Colors. In AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011), the Court overturned California’s Supreme Court which had held that a class action waiver in a consumer arbitration agreement was presumptively unconscionable. I previously spoke about this decision on NPR, posted on the blog here. Though California had held (correctly) that it was unfair for a big company to strip away our rights to come together to fight against wrongdoing with words hidden somewhere in the fine print of an arbitration agreement, the Supreme Court said that the FAA allowed companies to do exactly that.

Since AT&T Mobility, consumer, antitrust, and employment lawyers have argued that arbitration agreements that preclude class actions can still be combated where we were effectively barred from vindicating statutory rights – in other words, where we would have no fighting chance proceeding as an individual. Today, the Supreme Court (as Justice Elena Kagan’s dissent explains) held as follows, with respect to the fact that arbitration agreements with class action waivers effectively deprive victims of all legal recourse: “Too darn bad.” Slip Op., Dissent at p. 1.

According to Justice Scalia, it doesn’t matter that the wage laws, consumer protection laws, anti-discrimination laws, and antitrust laws won’t be effectively enforceable in many instances, without class or collective action recourse, because we all “contracted to” litigate our claims individually. Slip Op., at p.4. But Justice Scalia’s reasoning is just disingenuous.

We never knowingly agreed to that. We took a job because we needed to work. We bought a cell phone because we needed a cell phone. We started a business and got credit card service for our customers’ use. We did not negotiate with AT&T Mobility, or American Express, the terms of these arrangements. They handed us some fine print documents – maybe put them in the box when we bought a product – maybe (in the employment context) told us that we needed to sign all the paperwork to get added to payroll. Of course, at the time, we had no idea that we would have a dispute with these big companies, that they would cheat us of money, or discriminate against us, or break some other laws. We only learned later – when the big companies did these things – that we were without any meaningful recourse, because none of us are going to spend $100,000 to try to get $10,000, or $100, or $10. Remember – we are Americans, and we care about capitalist incentives, too, just like the big companies. We’re not asking for handouts, but we don’t think the big guy/gal is above the law, either. When they break the law, we need to be able to hold them accountable. We can’t put a company in jail, like the pickpocket who steals your wallet, but we can hit them where it counts – the bottom line.

Since it is clear the FAA is going to be used to take away all of our meaningful recourse to fight big companies, we need to change the FAA. The Arbitration Fairness Act of 2013 is currently pending (HR 1844; S878). Most of us never cared about arbitration before, but it is time to start paying attention. Contact your congressperson or senator, before big companies hurt you too, and leave you with no way to fight for your rights. To find who you need to contact, click here.

1 comment:

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